Chapter 7: Time Series

Question 1

What is a timeseries

Answer 1

It is a set of observations recorded over a period of time such that the time spent between each observation is the same

Question 2

Name the movement components of a timeseries

Answer 2

• The long-term movement
• The cyclic component
• The seasonal component
• Irregular variation

Question 3

What is the difference between the additive model and multiplication of model

Answer 3

Additive
Y=L+S+C+I

Multiplicative
Y=L *S *C *I

Y being the timeseries value at a certain point in time

Question 4

What are the properties of a long term movement

Answer 4

• Allows to identify a historical pattern
• Allows to predict future trends

Question 5

What are the properties of a cyclic component

Answer 5

• Fluctuating movement around the long-term movement
• Forms a pattern over time
• Length of period may vary from a few years to several decades

Question 6

What are the properties of a seasonal component

Answer 6

• Gives rise to the systematic monthly/quarterly variation patterns
• Caused by regular occurring events such as seasonal weather, school holidays

Question 7

What are the properties of irregular variation

Answer 7

• Unpredictable and random variation
• Caused by events such as natural disasters or human events
• difficult to represent mathematically